Thursday, June 18, 2015

Outstanding Update On The Bakken, June, 2015

After January 1, 2016, if this article is unavailable, and you want to see it, let me know. I will have a copy. For folks who follow the Bakken, the linked article is a "keeper."

From the article:

Just how much of the 7.4-Bbbl Bakken/ThreeForks resource potential will the shale operators be
able to exploit?

It all depends upon the profitability of their
operations in 2015, and beyond, in the light of low crude oil prices.

According to the North Dakota Industrial Commission, the wellhead price
that operators are getting has touched $30/bbl.

Hedges and swaps are
protecting many of the operators, such as Whiting Petroleum, to crude
prices just $5-$6/bbl less than the NYMEX prices, as far into the future
as 2020.

With significant cost reductions, a few of the operators, such
as EOG Resources, are suggesting that their economics are better at a
$65/bbl crude oil price than they were when the price was $95/bbl.

Meanwhile, ConocoPhillips says its full-cycle finding and development
(F&D) cost in the Bakken is only $20/bbl. As such, industry
analysts, who’ve suggested the decline and fall of the Bakken/Three
Forks play, may be premature in their pessimistic assessments.

For that reason, one of the two data points I am most anticipating in tomorrow's Director's Cut: the wellhead price of North Dakota light crude oil.

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"Energy Cookie" For The Day

EIA's "energy cookie":

From June 2014 to May 2015, when the oil and gas prices as measured by the PPI fell by 49%, the PPI by industry classification showed the following changes:

rates for drilling activities, which primarily represent service fees for contractors to drill oil and gas wells, declined by 19.6%

rates for support activities, which include the surveying, cementing, casing, and otherwise treating wells, declined by 1.4%

the price of sands primarily used for hydraulic fracturing declined 12.5%